Jabil Circuit Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Jabil Circuit (NYSE: JBL) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Jabil acts as a contract manufacturer of electronics, working for other companies to help them make their products. Being behind the scenes has been lucrative for Jabil over the years, but it also leaves the company exposed to its customers' failures. Let's take an early look at what's been happening with Jabil Circuit over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Jabil Circuit

Analyst EPS Estimate

$0.54

Change From Year-Ago EPS

(6.9%)

Revenue Estimate

$4.38 billion

Change From Year-Ago Revenue

3.4%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will Jabil Circuit keep producing this quarter?Analysts have gotten less excited about Jabil Circuit's earnings prospects over the past few months. Consensus earnings estimates for the just-finished quarter have fallen by a nickel per share, and calls for the full 2013 fiscal year have seen cuts of nearly a dime per share. Yet the stock has still done well, climbing 10% since mid-December.

Jabil Circuit is one of the many companies that have capitalized on the success of Apple's (NASDAQ: AAPL) products. Jabil makes the aluminum casing for Apple's iPhone 5, which provides a huge amount of the contract manufacturer's overall business. Yet what may not be obvious is relying on Apple for so much of its business hasn't been entirely positive for Jabil, as Jabil's margins have shrunk in recent quarters in reflection of the pricing power that Apple has over its suppliers. Even worse, as Apple's prospects have grown dimmer in recent months, lower shipments have pressured Jabil's shares as well.

But Jabil has made a big move recently to diversify itself, announcing in February that it will buy plastics-maker Nypro. Nypro makes packaging for health-care and other consumer products, and Jabil believes that Nypro will complement the consumer-electronics side of its business as well as adding to its overall breadth.

The big question is whether the Nypro move will keep Jabil ahead of its rivals. Flextronics (NASDAQ: FLEX) recently struck a deal with a medical manufacturer to help it produce a mobile diabetes management system, showing its own willingness to go beyond the traditional electronics area. As competition becomes fiercer, Jabil will have to work harder to distinguish itself from its peers.

Apple investors should be just as interested in Jabil's quarterly report as Jabil investors, keeping a watch on early signs that could give hints to Apple's more recent performance with its iPhone 5. With Apple investors hungry for every bit of news they can get, Jabil's hints about its sales of aluminum casings could provide key information about the iPhone maker.

Apple's latest prospects have investors worried about its future prospects, raising the question of whether Apple remains a buy. Let Motley Fool senior technology analyst and managing bureau chief Eric Bleeker give you his views on what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

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